— PHOTO: KAMAL NARANG

LENDING SUPPORT: Union Minister for Finance P. Chidambaram (second from right) with Minister for Small Scale Industries and Agro and Rural Industries, Mahabir Prasad (left), going round the National Expo of Small, Khadi, Village and Coir Industries in New Delhi on Wednesday.

NEW DELHI: Finance Minister P. Chidambaram has ruled out any cut in domestic oil prices in the wake of the softening trend in global crude oil prices, but noted that this would reduce the subsidy burden on both public sector oil companies and the Government. He said the reduced subsidy burden would ensure that more funds were available for re-investment by these companies.

Speaking to reporters on the sidelines of the National Exposition of Khadi, Village and Coir Industries, he said that when the international oil prices rose, the entire burden had not been passed on to the consumers and the recent decline in prices had, thus, only lessened the subsidy burden of the national oil companies and the Government. On the oil bonds proposed to be issued to oil marketing companies to meet their losses, he said the softening of world oil prices would not have any impact on the size of the oil bonds.

Earlier, inaugurating the expo, he disclosed that the Government had decided to set up an Empowered Group of Ministers to lay down policy for cluster development and oversee its implementation. He said this was meant to provide some coordination among different ministries, which were implementing cluster development programmes.

Mr. Chidambaram also stressed that the Government was well on its way to double the credit flow to the small scale sector. According to a package announced last year, he said the Government had proposed to double the credit to the small scale sector in next five years. The Government has now decided to increase the corpus for providing guarantee on bank loans up to Rs. 25 lakh availed of by the small scale sector to Rs, 2,500 crore from Rs. 1,300 crore over five years.

In addition, he said, the one-time guarantee fee under the scheme had been brought down to 1.5 per cent from 2.5 per cent.

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